Posted on 30-6-2004

Gates Tries To Be Moses In Asia
29.06.2004

NEW YORK - Microsoft chairman Bill Gates, seeking to stem the spread of
open-source software such as Linux, meets Prime Ministers in Australia and
Malaysia and officials in China this week to promote his Windows operating
system in Asia, the world's fastest-growing personal-computer market.

Gates and chief executive Steve Ballmer are also meeting clients such as
Fujitsu chairman Naoyuki Akikusa and Telstra chief executive Ziggy
Switkowski.

Neither Gates nor Ballmer will visit New Zealand on this trip.

Microsoft said last week that it would woo some Asian customers with
simpler versions of Windows at a lower price, to fight Linux.

The dominance of the Windows operating system, which runs 95 per cent of
the world's PCs, is coming under greater attack in Asia than in any other
part of the world, analysts say.

Linux for PCs sold three times as many copies in Asia as in the US last
year, and China, Japan and South Korea in September issued statements
agreeing to develop Linux and other so-called open-source software
together as an alternative to Windows.

"In emerging markets such as India and China, where PC growth rates are
the highest, Linux's momentum seems to be accelerating," said Robert
Stimson, a Bank of America analyst in San Francisco, who has a "buy"
rating on Microsoft shares.

"Leading government organisations in these countries have resorted to
Linux, and it remains to be seen whether commercial enterprises will
follow."

Linux is available free over the internet.

Companies such as IBM and Novell also modify it to suit customers' needs
and sell the software and related services, generally at a lower price
than Windows.

Gates and Ballmer want to keep Linux from spreading in the more than US$10
billion ($15.7 billion) market for PC operating systems, where Windows
provides 32 per cent of Microsoft's sales.

In Germany, the Munich city administration decided this month to switch
14,000 PCs to Linux from Windows, the biggest PC defection, according to
Pacific Crest Securities in Portland, Oregon.

Microsoft shares rose 18USc to US$28.57 on Friday in trading on the Nasdaq
Composite Index.

They have added 4.4 per cent this year, compared with an 18 per cent gain
for Red Hat, the world's biggest Linux distributor.

Gates will meet Australian Prime Minister John Howard and Malaysian Prime
Minister Abdullah Ahmad Badawi, and is scheduled to visit China.

Ballmer will meet Fujitsu's Akikusa and Government officials in Japan, and
also visits South Korea.

"These gentlemen are understandably coming out to speak with Governments
on behalf of their product and to ensure its longer-term viability," said
David Satterwhite, executive director of the Fulbright Commission in
Japan, an independent analyst of political and economic development.

Sales of PCs in Asia grew 14 per cent last year, outpacing growth of 12
per cent worldwide, says researcher IDC.

PC Linux shipments in Asia reached 448,124 copies sold last year, compared
with 142,131 copies in the US, according to researcher Gartner.

Asia accounted for almost 11 per cent of Microsoft's US$32.2 billion in
sales last year.

Yesterday, Fujitsu said it would use the next version of Windows for its
server computers, and the two companies plan to set up a joint engineering
team at Microsoft headquarters this year.

Shipments of Linux for server computers that run corporate networks grew
at an annual pace of 57 per cent globally in the first quarter, compared
with 16.4 per cent growth for Windows server software, IDC said.

In Australia, Gates said yesterday that Microsoft would donate A$40
million ($44.5 million) in cash and provide software and computers to five
charities that are building a network of more than 100 community computer
centres.

During a trip by Ballmer to Japan in November, computer industry groups
from that country, South Korea and China urged their Governments to use
programs such as Linux.

The Japan IT Services Association, the China Software Industry Association
and the Federation of Korean Information Industries said then that they
would meet near the end of July in Sapporo, after consulting in Beijing in
March.

Charles Cousins, the Singapore-based managing director of the Asian unit
of anti-virus maker Sophos, said some businesses that started to use Linux
on servers still preferred Windows on their PCs.

Windows for PCs accounted for US$10.3 billion in sales in the fiscal year
to last June, while server and tools software contributed US$6.5 billion.

"Linux is increasing at the server level," Cousins said.

"At the desktop level, people are in wait-and-see mode."

- BLOOMBERG